California Olive Oil Versus The World
This column is scheduled to run in the Capital Press in Summer 2006.My column on September 1, 2006, focused on some of the less-publicized realities of both the California olive oil market and super high-density plantings of olives for oil production. Some readers have taken issue with a few of my assertions.
One reader felt that my equating the price of commodity olive oil on the global market with that of California olive oil is misleading. Although California oil can enjoy a premium for being fresher and more local, this premium is only enjoyed in the niche market. There is a niche for California oil in the ingredient and food service markets, however, this niche is relatively narrow and is by definition price sensitive.
In terms of freshness, olive oil is made once a year. Since it often takes a few months for oil to make its way to the US from Europe, domestic producers do enjoy some logistical advantages in terms of shipping fresh oil to their customers. In the Northern Hemisphere, the oil production season is generally over by March, while the season in the Southern Hemisphere begins around May. Thus, as producers form Australia and South America further develop their reach into the US market, domestic producers will only be able leverage their freshness advantage until June or July.
The San Francisco Chronicle article, on which my original column was based, featured a heading stating, “Mechanization is the future.” This is a very salient point and it introduces a number of additional potential pitfalls for olive growers. At a very basic level, the oil yield for olives is dependent upon the degree of ripeness of that fruit. Thus, if you harvest the olives too early, you will see a noticeable decrease in the oil yield.
The olive varieties used in the super-high density system tend to reach peak ripeness in November. However, sometimes, as was the case in the fall and winter of 2004, the season slows down and the olives don’t reach peak ripeness until after the first few cold days. When your entire economic model is dependent upon mechanization, inopportune rains can present major problems. Since most harvest equipment will sink in a wet field, growers will invariably face years in which they will have to harvest their olives before they reach peak ripeness. When the economic model is based upon the oil yield per ton and all of the cost studies set the average yield at 40 gallons per ton, a yield of 28 gallons per ton, which is a realistic estimate for unripe fruit, can be financially catastrophic.
My point regarding super-high density olives remains the same; proceed with caution. All of the acres planted to super-high density olives in the state are planting the same basic varieties; Arbequina, Arbosana, and Koroneiki. Thus, if the fortunes of these varieties plummet, if they are painted as inferior varieties or bulk varieties, there may be very little room for differentiation for producers who decide to attempt to market their oil themselves. Markets are fickle and consumer perception ultimately becomes the producer’s reality.
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posted by Brian J. Kenny @ 1:52 AM
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